PROFITING WHEN OTHERS PANIC
Panic is the over riding instinct that causes otherwise solid stocks to suddenly go on sale. You see it all the time. People want out after a meltdown. They can't take the pain and uncertainty, so instead of looking beyond the calamity, they bolt after the annihilation. This can provide one of the greatest opportunities you may ever have for increasing your wealth. This issue's Fallen Angels are healthy, rapidly growing gorillas that have been taken down...for now.
Buy When Others are Complaining, Sell When They are Celebrating
Panic makes us crazy. Neuroscientists using MRI's have observed what happens to human beings when presented with a sudden and scary financial surprise. A good deal of blood rushes to the area of our brains that causes us to freeze. The same neurological response occurs for a deer when confronted with a pair of headlights. A cool head and careful attention to the fundamentals can make us a great deal of money when others are fearful. The methodologies for stock selection found at www.gabrielwisdom.com can help when these recoverable calamities occur.
Inflation? The Future Looks Good
Since 1802, when U.S. Treasury Secretary Alexander Hamilton introduced the first stock, through 2004, stocks' real return, with inflation subtracted, has averaged 6.8% a year with reinvested dividends. Inflation adjusted, stocks have just about doubled every decade. According to research done by Jeremy Siegel, a finance professor at the Wharton School of Business, a dollar invested in U.S. stocks in 1802 would have been worth $650,000 by the end of 2004. That compares with a mere $1090 for a dollar invested 203 years ago in bonds, $294 in Treasury bills, and only $1.42 for gold. The dollar itself was worth 6 cents of its 1802 value by 2004.
|
